Commentary

Digital Ads Going Self-Serve?

When I go to the supermarket, I avoid the self-serve lanes, mostly because I don’t feel like swiping barcodes myself. Call me lazy.

But in digital
advertising, self-serve may be the trend. Snapchat, for one is reportedly close to launching a self-serve option for Snap ads. Snapchat had already offered a self-serve option for its geofilters, with
certain commitments part of the deal. The move comes after Snapchat’s IPO, which valued the company at $20 billion, and amidst very strong competition from Instagram and, of course,
Facebook.

In its IPO filing, Snap stated, “We are always working to improve our delivery based on past delivery decisions. We can make better choices when we have more
options, such as more available impressions and more advertisements to fill them with. This means that we expect our advertising delivery to improve to the extent that user engagement grows and our
advertising business scales.”

Snapchat says that over 150 million use its service every day, and they
watch more than 10 billion videos daily, spending an average of 25 to 30 minutes doing so.

Snapchat is due for their next public earnings report next month, which will be closely
scrutinized, so any improvements—or problems— to the ad platform will be examined under a microscope.

In its financial filings, Snapchat concedes that its ad platform
is “young.” Everything about Snapchat is aimed at least appearing young, from its ridiculous home page to its claim to be a camera company and not a social network. But then, maybe it is a
camera company after all. The company makes a lot of gaffes and mistakes, the most recent related to Snap’s India branch, amid supposed statements by CEO Evan Spiegel. According to a former
employee, Anthony Pompliano, he had expressed concern that Snap wasn’t expanding in the third world, and that Spiegel snapped, “I don’t want to expand into poor countries like India
and Spain.”

Pompliano made this claim in a lawsuit. He alleges he prepared an internal report intended to show the company’s flawed metrics, which Spiegel hated,
leading to the above outburst and his termination. Snapchat calls Pompliano a “disgruntled former employee,” noting he worked there in 2015 for only three weeks.

That
doesn’t stop the blogosphere from posting this kind of snark on Yahoo Finance: “Way to go Spiegel, you just lost a 1.25 billion people market in India. Snapies, not much you can do against
your CEO. Remember, you have no voting rights whatsoever against the mismanagement of your so loved company.”

Given the anonymous nature of such postings, Pompliano himself
could have posted this, of course. Frankly, we doubt that anybody as apparently sophisticated as Spiegel would say such a thing. Having lived in India, I could note that the estimated middle class on
the subcontinent is about 267 million. That’s not a good target audience? Have you ever worked at a dotcom where the chief engineer wasn’t trained at one of those Indian technical
institutes? I haven’t.

Pompliano also worked at Facebook as a product manager for a year and 7 months and was hired away by Snapchat.

In past columns on
Snapchat, we noted that the company acknowledged in its S-1 filing that the company didn't ask for users’ ages before June 2013, and for those users who signed up before that, their age is
“estimated” based on “a sample of self-reported ages.” Hmmmm. Pompliano’s lawsuit claims that Snapchat simply made up having over 100 million users (it says 150 million
on Snap’s Web site), and has fudged other metrics.

Far be it from me to trust anything a disgruntled former employee claims, especially one whose tenure was that short. But surely it
doesn’t help for a company putting out earnings soon. The numbers better be good. A lot of commentators on financial boards think the true level of the stock is $10, not the $20 it’s been
selling at lately. Let’s see what happens next month.